Lessons from the crisis management in Toyota Case
LIM THIAM HUAT 207102
DR. HAMID MAHMOOD GELAIDAN
School of Business Management
College of Business
Uinversty Utara Malaysia UUM
This assignnment’s purpose is to identify the crisis management issue in Toyota Corporation’s series of worldwide recalls of malfunctions in Toyota vehicles. Therefore, here presented the brief overview of historical developent of Toyota. Some detail in crisis situation in the firm found itself is presented in this analysis. This previously a recognized world leader which is Toyota had give us an excellent example of failure to manage the crisis.
Dealing with crisis effectively in the private sector is not as easy as we think. Seize and act upon when there is a crisis approaching. So, it is said that if once the crisis has passed out the threshold in preliminary crisis recognition, the opportunity to deal more effectively with it had lost. The market is becoming one integrated marketplace nowadays as the walls and barrier are falling and collapsing, no boundaries and the technology is very advanced at this consumer-centric age. According to Friedman (2006), he refers this phenomenon as triple convergence of the elimination of the barriers to create a new flat world platform. While Pink (2005) defines that the seismic shift are under way from Information age to the Conceptual Age. These making the corporate leaders are undergoing implications of managing a critical issue or crisis in this new era, and of course, it will be more complex and surreal comparing the last existing scenarios. Virtually in every corporation, a crisis can be expected to be on the edge either presently existing or it had just passed through or might be a combination. The world of business is taught by the constant existence of crises that the crisis may occur with small or absolutely no warning at anytime and anywhere no matter size, state, industry, locally or internationally. However, there is no need always to worry because it is not always a bad news for the corporations but it is yet to be proven real. If this is proven and accepted, one will recognize that in these unpredictable times, anything complex will be possible, this includes devastating crisis and very threatening to individuals and corporations. In essence, there are four main distinct phases in a business crisis timeline which are pre-crisis, acute crisis, chronic crisis and crisis resolution stages according to Fink, 1986. Problem Statement
In September of year 2007, Toyota recalled 55,000 automobile floor mats and that’s when the pre-crisis stage became public. The floor mats possessed the risk of sliding forward and trapping gas pedal, which is very fatal to the car user if there is any emergency. Few more cases such as sudden acceleration out of control and when the car exceeds 100 mph, the car will become “no brakes” had worsen the case. Four occupants were killed in a crash.
Toyota announced a second recall in the January of 2010 for an additional 2.3 million vehicles because of the existing problem in the gas pedal. Toyota recalled about nine million vehicles from the world wide.
Toyota also tried in continuing to observe any other possible contributing factors to the unintended acceleration from few aspects including human error, electronic and mechanical factors. Nonetheless, Toyota was fined by the US Government at $16.4million due to slow responsiveness to the problem. Literature review
The study starts from the history of Toyota which describing its background. It was established in 1933 as a manufacturer to produce Japanese truck and was sponsored by the Japanese Imperial Army to give support of its military invasion in the Asia. Toyota was then given the license to enter into automobile manufacturing by the US military followed by the Japan surrender in 1945. Toyota’s early program developed into kaizen which is very well-known now for the...
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